Romania‘s economy is expected to expand by 2.6% in 2022, the World Bank said, affirming its January forecast, according to See News.
For 2024, the World Bank expects 3.9% economic growth, 0.3 percentage points lower than its January projection, the global lender said in its spring 2023 World Bank Europe and Central Asia Economic Update report published on Tuesday.
“The outlook hinges on several factors, including the spillovers from the war in Ukraine impacting the European economy in which Romania is highly integrated, persistent core inflation, and additional volatility in energy and food prices,” the World Bank said.
De-anchoring inflation expectations could prolong the monetary tightening cycle, leading to increased financing costs and a slowdown in investment.
Romania’s ability to absorb EU funds will be critical for its recovery, being able to mitigate the impact of higher interest rates and any potential downturns in private investment, while also alleviating fiscal pressures resulting from heightened food and energy prices.
Poverty is expected to continue to decline slowly in 2024, depending on how long food and energy prices remain elevated, as well as the effectiveness of government measures meant to help low-income families absorb rising costs.
The latest World Bank estimations are marginally more optimistic than those of the Romanian government, which expects 2.8% economic growth in 2023.
The World Bank report shows that growth in Central Europe, which includes Bulgaria, Croatia, Hungary, Poland, and Romania, is forecast to slow to 1.1% in 2023 from 4.7% last year. A slowdown in the eurozone is seen to dampen external demand, hindering growth, while political uncertainty, particularly ahead of elections, may amplify downside risks.